Broker/Dealers Facing Potential Talent Shortage

Pershing LLC, a BNY Mellon company, said the percentage of investment
professionals over 55 years of age increased from 32% in 2007 to 36% in
2009. At independent B/Ds, investment professionals with
less than $50,000 in production dropped from 55% of affiliated
investment professionals in 2005 to 42% in 2009.

Meanwhile, investment professionals’ willingness to switch
firms creates opportunities and challenges. According to the study, 2%
of brokerage-affiliated investment professionals with $50,000 or more in
Gross Dealer Concession (GDC) would target a wirehouse when changing
firms. Nearly half (47%) preferred an independent B/D, and
22% would seek to join or start an RIA.

While 64% of investment professionals report that they are
“very unlikely” to leave their current firm, 12% say they are at least
somewhat likely to move to a different firm within the next three years.
This translates into 11,600 B/D affiliated investment
professionals seeking to join a new firm each year.

In rank order, independence, firm brand, and services and
support are the top reasons that drive an investment professional to
join a particular B/D. The top three reasons investment
professionals decide to stay with one, in order of
importance, include services and support, culture and independence.

“With many investment professionals moving toward retirement or
more independent business models, a broker-dealer’s growth will
increasingly be tied to its ability to successfully attract, develop and
retain top talent,” said Jim Roth, managing director of Pershing. “In working with our independent broker-dealer
customers, we emphasize the importance of creating compelling
differentiators that attract and retain investment professionals, which
will help provide firms with a clear competitive advantage in the years
ahead.”